Home > News > Changing Landscape of the E-Commerce Sector vis-à-vis the FDI Policy

Changing Landscape of the E-Commerce Sector vis-à-vis the FDI Policy

E-commerce has seen exponential growth in India since the issuance of press note 2 of 2000 by the Government of India permitting 100% foreign direct investment (“FDI”) in Business to Business (B2B) e-commerce activities. With the growth came deviations and the Government received many complaints about certain marketplace platforms violating the policy by influencing the price of products and indirectly engaging in inventory based model, which is not otherwise permitted. The Government issued another press note dated December 26, 2018 (“Press Note”) to introduce certain changes to the FDI policy in the e-commerce sector. Coming into effect from February 1, 2019, this Press Note has had far-reaching implications on e-commerce entities (with FDI) operating in India, requiring them to significantly overhaul their existing business model to comply with the current FDI Policy. Reportedly various e-commerce giants like Amazon sought an extension for compliance with this Press Note, however, no such extension was granted, and this Press Note became effective on February 1, 2019.

Read more